This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Are Consumers Falling into the Credit Card Trap Again?

NEW YORK ( LowCards.com) -- Maybe consumers are feeling better about the economy. Or could it be that we are once again starting to rely on our credit cards a little too much? Some recently released figures make an argument for both sides of this debate.

The Federal Reserve Bank of New York released its latest Quarterly Report on Household Debt and Credit recently. It showed the number of open credit card accounts rose by 3 million, to 386 million, during the fourth quarter of last year.

Credit account inquiries within six months, an indicator of consumer credit demand, increased 2.7% for the third quarter in a row.

The report also found that credit card limits rose by $98 billion, or 3.6%, in the fourth quarter of last year, resuming the trend of increases observed in the first half of the year. This may indicate that banks are willing to take more of a financial risk with their cardholders.

The last two monthly G19 reports from the Federal Reserve show that consumers used their credit cards quite extensively to fund their holiday shopping. Revolving credit, which is made up primarily of credit card debt, increased at an annual rate of 4.1% in December. It rose nearly $3 billion, to $801 billion. This follows a jump of $5.5 billion in November, an annual rate increase of 8.4%. December was the fourth straight month of increases in revolving credit.

Consumer spending is one sign of a healthy economy. Consumers can't afford to fall into the trap of spending more than they can afford, though, especially on their credit cards. If cardholders carry a balance on their credit cards, the high APRs issuers are now charging will destroy them financially. If consumers can't pay off their entire balance on time every month, they will start to fall into the trap that helped lead to so many troubles during the recent economic recession.

-- Reported by Bill Hardekopf of LowCards.com.
Bill Hardekopf is chief executive of LowCards.com, which compares and rates more than 1,000 credit cards. He is the co-author of "The Credit Card Guidebook."

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $125.42 0.72%
FB $85.76 -0.04%
GOOG $520.60 -0.18%
TSLA $268.26 2.38%
YHOO $39.29 0.98%

Markets

DOW 17,619.51 +23.16 0.13%
S&P 500 2,063.12 +5.48 0.27%
NASDAQ 4,986.8670 +28.3990 0.57%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs